The research center of the Government Savings Bank (GSB) foretasted Thai economy to grow by 3.6 percent in 2019. The figure was lower than that in the previous year. This slowdown was mainly due to the hit of the trade war, which led to Thai baht appreciation that further weighed on the exports of goods and services. Meanwhile, high household debt affected household purchasing power, according to Mr. Chatchai Phayuwannachai, director of GSB, on July 25 (Thursday), 2019. Whilst Thailand's economy is expected to grow by 3.5 percent in 2020.
Factors contributing to Thailand's economic growth in 2019 include the following points. First, the domestic political situation has returned to the normal trajectory and confidence of investors and consumers has been improved. Second, fueled by the foreign direct investment policy (FDI) launched by the government and substantial preferential policies for investment provided by Thailand's Board of Investment (BOI), investment in the private sector continues to grow. Third, the government distributes welfare cards and takes tax measures to shore up the economy, aiming to improve household purchasing power and promote domestic spending. Fourth, low interest rates and a downward trend in oil prices are conducive to reducing corporate costs. Fifth, the overall stability of the economy can enhance the confidence of foreign investors.
While risks undermining Thailand's economic growth in 2019 include: (1) The impact of the U.S.-China trade war and the surging baht will weigh on exports of goods and services. (2) Government spending is likely to fall short of targets, mainly because of budget delays, and the fiscal year 2020 budget spending bill may not be enacted as planned. (3) The slowdown in China's economy has weakened the purchasing power of Chinese consumers, who are the main buyers of high-end Thai real estate. It is expected to lead to a decline in Thai real estate growth. (4) Household debt still stands at a high level, and the quality of loans tends to deteriorate, striking household purchasing power. (5) The global economic slowdown coupled with the appreciation of the Thai baht resulted in a decline in tourism.
The overall economy is running smoothly, but there are some negative impacts due to the reduction of trade and service surplus. Oil prices are falling, thus slowing overall inflation. Meanwhile, core inflation dips as domestic purchasing power declines. In addition, monetary policy remains broadly ease to drive continued growth, Macroprudential and Microprudential regulations were implemented, and efforts were stepped up to restrict the strong baht by reducing the short-term bonds issued by the Bank of Thailand. These measures will help mitigate the vulnerability of the Thai economy and enable it to achieve stable and long-term development amid the slowdown of the global economy and in major trading partners.
Source: InfoQuest, by Kasamarporn Kittisamphan / Rachada, translated by Xinhua Silk Road
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